The Union Cabinet on Friday approved a policy for auction of coal for “any industrial use” and exports, in a major relaxation of norms.
The policy will allow allocation of coal linkages on auction basis on long-term for any industrial use and exports by adding a separate facility.
Under the CoalSETU (Seamless, Efficient & Transparent Utilisation in the Non-Regulated Sector (NRS) Linkage Auction Policy of 2016, any domestic buyer requiring coal can participate in the linkage auction. Coking coal shall not be offered under this window.
The regulated area is thermal power generation.
The existing policy for the NRS provides for allocation of all fresh coal linkages to NRS like cement, steel (coking coal), sponge iron, aluminium, and others (excluding the fertilizer urea and including their Captive Power Plants) to be auction-based. As per the present policy of NRS Linkage, the sub-sectors are for specified end users only.
Breaking End-Use Barriers
“Looking at the current and future market dynamics and for the purpose of ease of doing business and for accelerated utilization of existing coal reserves and reduce dependence on imported coal for meeting country’s energy requirement, there was a need to have a fresh look at the current arrangements of coal supplies to the NRS, and extend the linkages in NRS to coal consumers without any end use restrictions,” the government said.
In line with the opening of the coal sector for commercial mining, which allowed allocation of coal blocks without any end use restrictions, this policy for auction of coal linkages for NRS has been modified for allocation of coal linkages on auction basis on long-term for any industrial use and export by adding another window/sub-sector.
Traders however shall not be allowed to participate in the proposed window.
The present auction of coal linkages for the specified end-user sub-sectors in NRS (Non-Regulated Sector) shall continue. The specified end-user (s), can also participate in this window.
New Window Benefits
The government said that coal linkage obtained under this window shall be for own consumption, export of coal, or any other purpose (including coal washing) except resale in the country.
Coal linkage holders will be eligible to export coal up to 50% of their coal linkage quantity.
The coal linkage holders may flexibly utilize the coal obtained under this window as per their requirement amongst its group companies.
“Considering the demand for washed coal, which would increase in future, the coal linkages to the washery operators will result in increased availability of washed coal in the country and consequently reduce imports. Further, the washed coal will also find takers outside the country and therefore, the washed coal may also be used for the purpose of export,” the government said.